College degree is costly, but it pays off over time

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While searching for a job that would utilize her bachelor’s degree in neuroscience, Matilde Hoffman worked two part-time hostess jobs in New York City.

By Jay FitzgeraldGlobe Correspondent
October 07, 2012

Higher education is expensive, challenging, and time consuming, but ultimately it’s an investment that pays off in today’s knowledge-based economy.

On average, those with bachelor’s degrees or higher earn more and enjoy far more job security than workers with only high school or even associate’s degrees, according to several national and local studies. And the demand for highly educated workers is only expected to grow in coming years as US and Massachusetts companies increasingly demand brains over brawn when it comes to job skills, economists and other workforce experts say.

“The economic and financial rewards of having a college degree are very clear,” said Michael Goodman, chairman of the department of public policy at University of Massachusetts Dartmouth. “There’s no guarantee that a college degree will bring everyone success. But on average, college is still the best career choice for most people.”

A college graduate will earn an average of $2.3 million over the course of a working life — $1 million more than the lifetime earnings of someone with just a high school diploma, according to data from the Center on Education and the Workforce at Georgetown University in Washington, D.C.

College graduates are also more likely to stay employed. In 2011, the unemployment rate nationally for those with at least a bachelor’s degree was 5.3 percent, well below the overall US rate of 9.1 percent. Unemployment among those with just a high school diploma was 12.5 percent. The jobless rate for high school dropouts was nearly 19 percent.

Jeff Strohl, director of research at the Center on Education and the Workforce, said the advantages of a college degree become apparent almost immediately after graduation.

Last year, the unemployment rate for recent college graduates — those 24 or younger — was 8.9 percent, just below the overall national average. In contrast, nearly one-third, 31.5 percent, of young high school dropouts were jobless, as were more than one-fifth, or 22.9 percent, of young workers with just a high school diploma, according to the Georgetown data.

“A bachelor’s degree in the long term can more than pay off tuition costs,” Strohl said. “Education pays.”

Granted, in today’s tough labor market, not all those college graduates have found jobs in their preferred fields, with many taking jobs that might not require a bachelor’s degree. But that has only made it harder for those without degrees.

Many recent college grads are, for instance, taking jobs as waiters and waitresses or as behind-the-counter sales representatives in retail outlets — effectively bumping noncollege workers out of those positions, said Neil Sullivan, executive director of the Boston Private Industry Council, a nonprofit job training and employment organization.

He calls that phenomenon “push down.”

“Boston is a good place for college grads,” Sullivan said, “but there’s no guarantee that they’ll get the jobs they trained for.”

But, labor specialists stress, not all college degrees are created equal when it comes to earning power.

The median pay for those holding liberal arts degrees is about $44,000 a year, compared with the median pay for engineering-degree holders of about $75,000, according to the Georgetown data.

Such pay discrepancies are the reasons why people like Andrew Sum, an economist and director of the Northeastern University Center for Labor Market Studies, are reluctant to pronounce college-level jobs as automatically superior to positions that don’t require degrees.

He noted that many construction, manufacturing, and other traditionally blue-collar jobs often pay competitively or more than some positions held by college-educated employees, such as social service workers.

“There’s a lot of variability around the earnings power of college degrees,” said Sum, “depending on what type of degree you get and the job market.”

With the costs of higher education only expected rise, people should carefully consider the types of degrees they want to pursue, analysts said. The average debt at graduation for bachelor’s degree recipients in 2011 was about $27,000, up about 50 percent over the past 10 years, according to a recent study by FinAid.org, an online publisher that tracks college finance trends.

But the debt load for many college grads is far higher, severely burdening them with monthly loan payments at a time when they’re scrambling to find any type of work.

UMass Dartmouth’s Goodman said people need to weigh the costs of a degree against potential earnings.

In some cases, shorter-term and lower-cost certificate and associate’s degree programs can provide skills for good-paying jobs in fields such as health care and biotechnology. “Not everyone needs to get a college degree,” Goodman said.

Labor specialists agreed there are career variables and pitfalls in almost any field, but on average, bachelor’s and advanced degrees mean higher earnings and more job security. In today’s economy, they said, education pays a premium.